Business leaders back industrial strategy that supports emerging businesses

The latest Growth Climate Index focusses on business attitudes towards the Industrial Strategy, government intervention and how best to approach the productivity challenge.

Nearly nine out of ten (88 per cent) business leaders believe that the UK needs a comprehensive industrial strategy according to BGF’s Growth Climate Index – a survey of over 280 business leaders and entrepreneurs measuring confidence in the UK’s business growth environment reveals.

However, more than three quarters (77 per cent) want the government’s proposed industrial strategy to direct targeted support towards emerging businesses and sectors (e.g. clean energy, robotics and biotechnology) compared to just 11 per cent who believe that the government should prioritise support for established business and sectors.

The findings point to considerable support for the principles behind the government’s industrial strategy. Nearly nine out of ten (86 per cent) of business leaders agree that under certain circumstances, it is right for the government to intervene in the private sector to support economic growth. A further 82 per cent believe that the government should focus on supporting SMEs specifically as it seeks to boost productivity.

While there is broad agreement on the principles, respondents are divided over whether further clarity on Brexit is more important for British business than an industrial strategy at this stage – 49 per cent agree compared to 47 per cent who disagree.

However, the evidence indicates that business leaders are overall feeling more positive about the outlook for growth. The results of the previous Growth Climate Index, conducted immediately after the Referendum vote shows that 72 per cent believe that conditions would worsen compared to just 12 per cent who expect them to improve.

This has changed to 38 per cent expecting conditions for growth to improve over the next quarter compared to 29 per cent who expect them to worsen (33 per cent don’t expect them to change).

When asked about their assessment of the past quarter, 36 per cent believe that conditions for growth have improved over the last quarter compared to 26 per cent who believe they have worsened (38 per cent think they have remained the same). Again, this represents a significant change from the last Growth Climate Index conducted in July 2016 when 66 per cent believed that conditions had worsened in the previous quarter compared to only 10 per cent who thought they’d improved.

Stephen Welton, chief executive of BGF says, ‘The government’s industrial strategy is enjoying strong support from the private sector but business leaders clearly want a break from the past. Rather than solely propping up established players and businesses at the top, there is a clear appetite for a new kind of Industrial Strategy which supports and energises growing businesses and sectors, but also recognises the role that smaller businesses can play in driving innovation and eliminating the productivity gap.

‘This task will only become more important as we leave the EU and build a new trading relationship with our European partners, and indeed the rest of the world.

‘Whilst uncertainty remains, this latest survey points to signs of cautious optimism and indicates that resilient British businesses are beginning to develop a positive and pragmatic vision of our future. I share this vision and BGF remains committed to investing in and supporting the UK’s most ambitious small and mid-sized businesses.’